Christian Worch claims to be proud of his family's far-right credentials. His father was a member of Adolf Hitler's Waffen SS fighting force. His grandmother is said to have helped the infamous Gestapo torturer Klaus Barbie – "The Butcher of Lyon" – escape capture. His grandfather was a devoted Nazi party member.

Worch's own track record is almost as disturbing. He has spent more than five years in jail for incitement to racial hatred and Holocaust denial. He has campaigned for the return of the Nazi party and attended rallies where participants brandished banners with the slogan: "I am such a donkey that I still believe the Jews were gassed in the concentration camps."

The 56-year-old, the educated son of a doctor, is described in Germany's authoritative "Far Right Handbook" as one of the "most experienced neo-fascists in Germany". Yet although he has been written off as a figure without a following, Worch could experience his long hoped-for political breakthrough in 2013.

He is the founder and leader of Germany's latest far-right political party, Die Rechte ("The Right"). The name is a deliberate play on the socialist Die Linke ("The Left") party, which is an established feature of the reunified Germany's political scene. Launched in the summer, "Die Rechte" threatens to become the outright political winner of a new legal battle to impose a nationwide ban on the vociferously racist and anti-immigrant National Democratic Party (NPD), which has been around for the best part of 40 years.

Germany's upper house of parliament, which represents the leaders of the country's 16 federal states, has begun legal proceedings to ban the NPD at the constitutional court following the emergence of new data which allegedly exposes the party as fundamentally unconstitutional, overtly racist and a threat to German democracy.

Chancellor Angela Merkel's government has said it will decide in March whether to back the federal states. Legal experts have said, however, that the states can go ahead and attempt to ban the NPD without federal government approval. If the ban is implemented by the constitutional court it could be effective ahead of Germany's September 2013 general election. Opinion polls show that about 70 per cent of Germans are in favour of the ban.

But experts on the far right have little doubt that if the 6,000-member NPD is eventually banned, its membership will immediately see Mr Worch's Die Rechte as their new home. A foretaste was provided by a regional NPD party near Frankfurt, which in early November simply switched allegiance to Die Rechte.

Bernd Wagner, a former police officer and one of Germany's most experienced observers of the far right, told The Independent: "Die Rechte is simply waiting in the wings. If the NPD ban goes ahead, then it is a virtual certainty that the party will step in to replace it."

Mr Wagner maintains that in a democratic society, the outlawing of one extremist party almost automatically means a replacement will form in its wake. "In this case Die Rechte has been set up before any ban has been imposed," he said. "This makes it even more problematic. The only answer would be another ban."

Mr Worch himself has cautiously admitted that any eventual NPD ban could be "useful". However, he has deliberately sought to distance his party from the NPD.

Die Rechte claims on its website to be "less radical" than its far-right sister party. It claims to fully adhere to the constitution and insists that its core concern is the "preservation of German identity".

Critics say such language is merely an attempt to lend the party's essentially racist manifesto a veneer of middle-class respectability. Although Die Rechte casts itself as a rallying point for all conservatives to the right of Ms Merkel's governing Christian Democrats, it is strongly supported by more radical, militant neo-Nazi groups which Mr Worch himself set up in the mid-1990s.

Unlike the neo-Nazi NPD, which has won parliamentary seats in two east German states, Die Rechte has not had enough time to notch up any election successes since its founding in May this year.

The party would need to overcome Germany's 5 per cent voter popularity hurdle if it were to stand any chance of running in a general or regional state election.

But the same rule does not apply in elections to the European parliament which are due in 2014. Mr Worch says that the run-off will be Die Rechte's first major popularity test. If Germany goes ahead and bans its NPD bedfellow, Die Rechte may have enough willing canvassers on hand to easily replace its condemned political predecessor.

A legal challenge: The National Democratic Party

Germany's largest neo-Nazi party has 6,000 members, seats in parliament in two east German states and more than 2,020 members on local councils. Founded in the 1960s, it was partially funded by donations from members of Adolf Hitler's Nazi party who went into exile in South America after the Second World War. Its programme is overtly racist but the party takes care to avoid displaying banned Nazi symbols to escape prosecution.

Government attempts to outlaw the NDP backfired in 2003. The constitutional court ruled that evidence against the party was inadmissible because it had been collected by "agent provocateurs" from the intelligence service.

Germany's 16 federal states have now launched a second attempt to ban the party. Politicians are under pressure to take action because of a series of immigrant murders uncovered last year, carried out by a far-right terrorist group.

However, several leading government members oppose the ban. They argue that it could fail a second time at the constitutional court or in the European Court of Human Rights and hand the NPD a major propaganda victory.